Power to the people?

Power to the people?
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First Published: Tue, Jan 02 2007. 12 47 AM IST
Updated: Wed, Jan 09 2008. 06 09 PM IST
The acquisition of 30% stake in Indonesian coal mines by Tata Power Company has surely a huge commercial upside for it. The deal secures fuel supplies for Tata’s two big power plants coming up on India’s west coast, including the 4000MW Mundra ultra mega power project. But does this benefit translate to the consumer?
TPC had won the bid for the imported coal-based Mundra project in a bidding process handled by the Power Finance Corporation (PFC). But, though it may have been a competitive bid at Rs2.26 per unit power, it may not have accounted for lower fuel costs through captive-coal linkages. The deal allowed liberal terms for the indexation of variable costs with global market prices of coal. It’s pertinent to note that traditionally, power producers in the country have not gone for making profits on the fuel front.
Now that TPC may not be slave to the vagaries of the global market, the question is, did PFC extract the best price from the Mundra deal?
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First Published: Tue, Jan 02 2007. 12 47 AM IST